The Business of Renewable Energy in a Digital World

“The Business of Renewable Energy in a Digital World” originally appeared on the Safari Blog.

You’re looking to cut your company’s energy use to save money while lowering your environmental impact at the same time. So, where do you start? You would likely turn to your facilities team to look into efficiency upgrades for your office buildings.

You may want to look at your IT department first.

The Digital Revolution has enabled so much in the way of innovation, market efficiency, and increased productivity. It’s also brought about social and environmental benefits such as greater connectivity and less reliance on material items like paper.

But all of this comes at a cost – literally.

Information and communication technology (ICT) essentially includes anything that interacts with information in a digital form (computers, email, cell phones, etc.) and it currently accounts for ten percent of the world’s electricity use. What does that mean? It’s about the same amount of power generated by Japan and Germany combined.

Data centers alone demand the equivalent of 34 power plants to keep them running. In our increasingly cloud-based, digital world, we’ll likely need 17 more power plants by 2020 to meet demand.

There’s good news, though, among these startling statistics. The fact that data centers are a huge energy pull also means they represent an enormous opportunity to achieve savings. A recent study estimates that if we cut data center energy use by 40 percent – only employing about half the strategies currently available – we could collectively save about $3.8 billion dollars.

And the strategies are plentiful. GreenBiz outlines common initiatives, such as:

Efficiency upgrades are an excellent strategy, and a great place to start when tackling energy use. They tend to have quick paybacks and require relatively small upfront investments. But what does a company do when it has moved past efficiency? Is a “clean-powered” data center achievable? Could a data center really become independent from the grid and its volatile price changes?

Following in the footsteps of tech giants like Apple and Google, Hewlett Packard has recently answered, “Yes,” to both questions. In July, HP announced a new 12-year contract to purchase energy from a wind farm in Texas. The plan is to purchase 112 megawatts of electricity – enough to power all of its data centers in the state.

The decision may seem bold, but it will allow HP to achieve several benefits at the same time:

1. Meet Sustainability Goals – HP aims to reduce greenhouse gas emissions by 20 percent below 2010 levels by 2020, and this agreement will ensure it reaches that goal.
2. Respond to Investor Demands – Shareholders are increasingly asking companies to show progress on climate change goals.
3. Reduce Costs – Renewable power costs have been consistently dropping, and they’re not prone to the price volatility of oil and gas.

When companies consider renewable energy options, however, many think only of installing solar panels or small-scale wind turbines directly on their buildings. On-site renewable energy can be a great option for some businesses, but involves a fairly high upfront investment.

Technologies like solar panels and wind turbines also require a large amount of physical space. A company may only be able to supply a small portion of its total electricity with rooftop solar panels, for example.

A PPA is a contract between an electricity generator – in HP’s case a wind farm – and a buyer. PPAs can be a good option for companies that have large energy needs, like data centers, because it allows them to purchase – or in some agreements, fund the generation of – electricity from renewable sources without owning the infrastructure.

And PPAs are becoming increasingly more popular. Companies have signed more in 2015 so far than in any other year, and many are in the ICT industry.

So, as you consider how to tackle rising energy costs associated with your company’s data needs, look to renewable energy options and PPAs. An upfront investment will save you a great deal in the long term and significantly reduce your carbon footprint.

For more information on integrating sustainability into your decision making, check out the “Managing for Sustainability” section of our course “Introduction to Sustainable Business” on Safari.